The Magnitude of J. P. Morgan

It cannot be measured in dollars alone. It involved a kind of personal power no man of affairs will ever have again.

A similar plan had been used before in times of economic crisis, and Morgan was confident that it would work. Before the panic was over, the banks would hold as much as eighty-four million dollars in Clearing House Notes, a major increase in the money supply of that time.

The Secretary of the Treasury had come to New York in the emergency, and he made available ten million dollars in government funds for deposit in national banks. John D. Rockefeller made another ten million available. On Friday Morgan raised thirteen million dollars in additional call money for the Stock Exchange, and he let it be known that anyone selling short to take advantage of the panic would be “properly attended to.”

As the sound banks continued to meet their obligations and the Stock Exchange continued to function, the panic began to abate. To be sure, there were many financial brush fires that needed attention over the next ten days, but the worst was over.

Although many Wall Street bankers, such as George F. Baker and James Stillman, had contributed substantially, it was acknowledged that only Morgan could have held them together and forced them to act in the general good, often at the peril of their own solvency. One of Morgan’s partners, George W. Perkins, said, “If there ever was a general in charge of any fight for any people that did more intelligent, courageous work than Mr. Morgan did then, I do not know of it in history.” Even Theodore Roosevelt, so fond of railing against “malefactors of wealth,” now praised “those influential and splendid business men … who have acted with such wisdom and public spirit.”

After the crisis was over, many radicals and reformers, such as Upton Sinclair, accused Morgan of having fomented the panic for his own nefarious ends, and these calumnies have been echoed over the years by others. Morgan was too proud to defend himself against such outrageous charges, and it is a measure of the critics’ profound financial ignorance that they could think that there might be any truth to it. A man whose own prosperity depends on the continuing prosperity of Wall Street as a whole—as every investment banker’s does—would no more precipitate a general panic than a commander would infect his own troops with typhoid.

In the last years of his life Morgan spent less and less time on Wall Street and more at his library or abroad on his endless collecting trips. In 1913 he traveled to Egypt, a country he knew well, to inspect an expedition of the Metropolitan Museum of Art that he was funding. There he took ill. He returned to Rome, where better medical treatment was available, but it was to no avail, and he was ravaged by fever. Near the end, as the fever played tricks with his mind, he seemed to be remembering some schoolboy adventure. “I’ve got to go up the hill,” he told his son-in-law, pointing upward with his finger, and then sank into unconsciousness and death on March 31. In the first twelve hours after his death, 3,698 telegrams, from the Pope, from emperors and kings, from bankers and industrialists, from art dealers and curators, poured into the Grand Hotel in Rome, where he had died.

Modern corporate America was shaped by Morgan and his contemporaries.

Two weeks later he was buried in Hartford, where he had been born nearly seventy-six years earlier into a world quite different from the one he lived to see and helped fundamentally to shape, and in which he prospered so mightily. In his will he left his wife and daughters very comfortably fixed and gave a year’s salary to every employee of J. P. Morgan and Company. To his son he bequeathed the bulk of his estate and the greatest art collection in private hands the world has ever known. He hoped a way could be found to make it available to the public. Today most of it is at the Metropolitan Museum and the Morgan Library in New York and the Wadsworth Atheneurn in Hartford.

Considering how very large Morgan loomed on the financial landscape in the first years of the twentieth century, many people were astonished at the relatively modest size of Morgan’s estate. It amounted to a little less than seventy million dollars plus his art collection, which was valued at an additional sixty million. To John D. Rockefeller—the country’s first billionaire—this was not even enough to make Morgan a rich man.

But Morgan had been born rich, and money for him was never a goal in itself. He could well afford to be ignorant of the cost of running his yacht (a standard that Morgan may or may not have coined), and that was quite enough for him. Nor, in a sense, had Morgan sought the immense power that was his, power of the sort money can never buy. That power, and thus Morgan’s unique place in American economic history, was his because of both the person he was—a banker of great skill, integrity, and total self-assurance—and the times in which he lived, as the nineteenth-century world of private banking and personally managed capital changed into the twentieth-century world of the national corporation.

In December 1913, eight months after Morgan’s death, President Wilson signed into law the Federal Reserve Act, establishing, at last, a true central bank for what had become a fully integrated national economy. Never again would the country have to call on a private banker to rescue its financial system in a crisis. And that is just as well, for never again could there be another J. P. Morgan.